Reaching net-zero targets will require an unprecedented level of investment. At the CBI’s Road to Net Zero Conference, our panel of experts discussed how to tackle this challenge and effectively mobilise green capital.
- Tony Prestedge, Deputy Chief Executive Officer, Santander UK Group Holdings and Santander UK plc
- Will Gardiner, Chief Executive Officer, Drax Group
- Rain Newton-Smith, Chief Economist, CBI
- Ingrid Holmes, Executive Director, Green Finance Institute
- Ian Simm, Founder and Chief Executive, Impax Asset Management
So what were the key points discussed?
Investors will need to understand risks and opportunities
Although the road to net zero comes with plenty of business opportunities and may strengthen business resilience in the long term, many companies fear that they will not be able to access the necessary finance to succeed in a net-zero economy.
Tony Prestedge from Santander highlighted that investors providing sustainable capital will primarily want businesses to use their business plans to explain how they will deal with transition-related risks and opportunities. He believes that investors will need to recognise that there might be temporary lower returns from some organisations when they are aiming to build long-term resilience in their business models. It’s a journey and few businesses will be sustainable from the outset.
Sustainability disclosures, emission reduction targets, and clear communication with your stakeholders can be helpful tools for strengthening your company’s sustainability strategy, he said.
Policy roadmaps will catalyse business action
The government has a key role to play in encouraging more investments from the private sector. CBI’s Chief Economist Rain Newton-Smith highlighted the need for transition “tram lines” to understand the overall roadmap for decarbonisation. Once policy frameworks are in place (for example, the Heat and Buildings Strategy), investors will be confident to get behind them and come up with finance for specific sectors of the economy.
This is why businesses and the government need to “roll up their sleeves and get the policy details worked out”, said Ian Simm from Impax Asset Management. In his view, a clear carbon price trajectory will be absolutely key to the government’s net-zero agenda.
Will Gardiner from Drax added that, from a business perspective, the government has an incredibly important role to de-risk and support necessary investments to crowd in private finance. Businesses will need long-term revenue certainty and government guarantees to raise investment levels.
The green taxonomy won’t provide all the answers, but will give us a direction of travel
The UK taxonomy will be a tool that can provide businesses with a “dictionary” for sustainable economic activities and specific technologies that will